tl,dr: Interactive Brokers pools and probably lends your shares...

tl,dr: Interactive Brokers pools and probably lends your shares when you have a margin account.


Disclaimer: I am not an expert on this. I tried to read several (actually, a lot!) pages of fine print on this a while ago but the broker easily makes it complicated for customers to understand whats really going on, imho.

I can only speak from my (overall, except for the shorting part: good) experience with Interactive Brokers (IB).
When you have a margin account they pool some of your shares (you cannot decide which afaik) as collateral.
In the 'activity report' (info for IB users) you find an entry called "Collateral for customer borrowing". There, your shares are separated into categories:
1) Securities segregated
2) Securities not segregated (i.e. pooled and used as collateral)
2.1) Securities not segregated: third party "right to use" (nearly all my shares fall into this category when I borrow money up to the initial margin limit!)
2.2) Securities not segregated: subject to stock yield enhancement program (euphemism for actively accepting a small fee for lending your shares to short sellers - none of my shares fall into this category because I haven't agreed to this by clicking a checkbox or so)

I don't know what the third parties' "right to use" (see 2.1) entails. Probably they have the right to sell the stock or lend it to a fourth party which does so... and I'm just the irrational retail customer that skips clicking the checkbox and thereby avoids free income (for good conscience).

I just hope the algorithm that decides which of the pooled shares are lent out from IB to third parties for their "right to use" is conservative enough that it does not lend shares which are subject of a sell order (regardless of ask price vs market price).

Details from Germany! (or in IB's case: Ireland)